April 14, 2021

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IDFC First Bank Launches QIP To Raise Funds; Shares Fall

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Shares of IDFC First Bank Ltd. declined after the private lender launched an institutional share sale to raise funds.

The capital-raising committee of the bank approved the launch of the qualified institutional placement issue on Wednesday, according to an exchange filing. The floor price of the QIP was fixed at Rs 60.34 apiece, a premium of 3.5% to Tuesday’s closing.

The board of the bank will meet again on April 6 to determine the issue price and other details of the QIP, the filing said.

The lender had approved a plan to raise Rs 3,000 crore in February on a private placement basis, through a follow-on public offer, a QIP or a combination there of.

This is the second fundraising exercise of the bank in the last one year. In June 2020, it had raised Rs 2,000 crore through issue of preference shares to entities, including promoters Warburg Pincus and IDFC Financial Holdings Ltd.

The fundraising will help the bank grow its loan book at a steady rate of 25% year-on-year for the next few years, V Vaidyanathan, chief executive officer, had told BloombergQuint in February. “Our stated agenda is to grow the book at 25% every year for the foreseeable future. Considering that we are targeting the retail and small business segment, it is entirely possible to achieve this growth rate,” he had said.

Shares of IDFC First Bank fell as much as 3.7% to Rs 56.1 apiece. Only one of the eight analysts tracking the company suggests a ‘buy’, three recommend a ‘hold’ and four have a ‘sell’ rating, according to data compiled by Bloomberg. The stock is trading 27.5% higher than its 12-month consensus price target of Rs 41.5.

The stock was the top performer on the Nifty Bank index from the lows of March 2020, with returns of more than 200%.

Hormaz Fatakia
2021-03-31 01:51:20

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